Nigeria: FG spent N408.5bn on debt servicing in February – Report

The Federal Government spent 85.37 per cent of its revenue servicing debt in February 2023.

The Central Bank of Nigeria, in its monthly economic report for February 2023, noted that the Federal Government had a retained revenue of N478.57bn in February.

The bank also stated that the Federal Government spent N408.5bn on debt servicing in the same month.

The report further showed that the country recorded a fiscal deficit of N513.05bn in February.

The report read, “The estimated overall fiscal deficit of the FGN expanded in February, due to a drop in the retained revenue. At N513.05 billion, the provisional fiscal deficit of the FGN rose by 22.8 per cent relative to the preceding month. However, it was 16.2 per cent below the budget benchmark.”

The International Monetary Fund recently said the Federal Government projected to spend 82 per cent of its revenue on interest payments in 2023.

According to the IMF, external debt (including that of the private sector) will rise to $121.6bn, with external reserves climbing to $37.5bn.

It stated this in a table of projections in its ‘IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria Summary.’

The projections showed an improvement in the share of the government’s revenue used as interest payment, with interest payment falling from 96.3 per cent in 2022 to 82 per cent in 2023.

It added that interest payment was 86.1 per cent and 87.8 per cent of the Federal Government’s revenue in 2020 and 2021, respectively.

The World Bank also projected that debt servicing will gulp 123.4 per cent of the Federal Government’s revenue in 2023.

This was according to a presentation made by the new World Bank Lead Economist for Nigeria, Alex Sienaert, in November 2022, which was obtained by our correspondent.

 In his presentation, the World Bank’s lead economist for Nigeria noted that borrowing more money was not the solution for Nigeria.

The document read, “Borrowing more is not the solution: debt costs are rising rapidly, squeezing non-interest spending.

“Debt servicing has surged over the past decade and is expected to continue increasing over the medium-term, crowding out productive spending.”